Notebook # 13- Economics 5-1 What is Supply?

What is Supply? Economics 5-1 ESSENTIAL QUESTION: Why do certain factors cause a change in supply?

What is Supply? Economics 5-1 GPS STANDARDS: SSEMI2- a.) define the law of supply and demand

What is Supply? Economics 5-1 The Law of Supply tells us that firms will produce and offer for sale more of their product at a high price than at a low price.

What is Supply? Economics 5-1 About how many hours do you spend studying every night? How many hours would you study if you were paid $1 an hour? $10 an hour? If you will study more for a higher price, you are following the Law of Supply.

What is Supply? Economics 5-1 For almost any good or service, the higher the price, the larger the quantity that will be offered for sale. Just like when you said that you will study more for a higher price, companies want to offer goods and services at the highest possible price to make the maximum profits.

What is Supply? Economics 5-1 When you work, think about your own labor. You are the supplier of the labor, and the higher the pay, the more work you are willing to supply. Companies selling goods and services feel the same way.

What is Supply? Economics 5-1 The concept of supply is based on voluntary decisions made by producers, whether they are proprietorships working out of home offices or large corporations operating out of downtown corporate headquarters.

What is Supply? Economics 5-1 For example, a producer might decide to offer one amount for sale at one price and a different quantity at another price. Smaller containers of ketchup cost one price; however, if you buy a larger container, it is offered at a better price because you bought a larger volume.

What is Supply? Economics 5-1 Supply, then, is defined as the amount of a product that would be offered for sale at all possible prices that could prevail in the market.

Notebook # 14- Economics 5-1 What is Supply? continued

What is Supply? Economics 5-1 ESSENTIAL QUESTION: Why do certain factors cause a change in supply?

What is Supply? Economics 5-1 GPS STANDARDS: SSEMI2- a.) define the law of supply and demand

What is Supply? Economics 5-1 Because the producer is receiving payment for his or her products, it should come as no surprise that more will be offered at higher prices.

What is Supply? Economics 5-1 An individual supply curve illustrates how the quantity that a producer will make varies depending on the price that will prevail in the market.

What is Supply? Economics 5-1 A market supply curve illustrates the quantities and prices that all producers will offer in the market for any given product or service.

What is Supply? Economics 5-1 Economists analyze supply by listing quantities and prices in a supply schedule (table).

What is Supply? Economics 5-1 When the supply data is graphed, it forms a supply curve with an upward slope.

What Is Demand? When the demand data is graphed, it forms a demand curve with a downward slope.

What Is Demand? When price goes up, the quantity demanded goes down; when price goes down, the quantity demanded goes up.

What is Supply? Economics 5-1 How do you explain that prices and quantities move in the same direction in a supply schedule? Producers will produce high quantities at the highest prices and low quantities at the lowest prices.

What is Supply? Economics 5-1 Producers have the freedom, if prices fall too low, to slow or stop production or leave the market completely. If the price rises, the producer can step up production levels.

What is Supply? Economics 5-1 What steps do you suppose a producer must go through in setting an introductory price for a product it brings to the market for the first time? The producer must study the pricing system for similar products and risk that competing producers will offer a like product at a lower price.

What is Supply? Economics 5-1 Why does using new technology almost always increase supply? It generally leads to greater efficiency, which lowers production costs, even though producers must initially train workers and adapt or create new production processes that accommodate the new technology.

Foldable Changes in Supply p. 116-118 Factors that cause a change in supply Factors that can cause a change in supply include: change in supply the cost of inputs productivity levels technology taxes or the level of subsidies expectations government regulations. number of sellers